As the maximum city, Mumbai continues to grow, it now has very little land left in its southern parts that can be developed at scale. Slums like Dharavi, the largest in Asia, sit on large plots of land but have been difficult to redevelop because of ownership issues, consent of residents and rehabilitation obligations, causing massive delays.

However, a new Slum Rehabilitation Authority (SRA) policy — with plans for more than five lakh rehabilitation homes and 19 cluster development locations by 2030 — has made large clusters easier to take up, drawing some of India’s biggest conglomerates into a market that was once largely the preserve of specialist real estate developers.

Reliance Industries entered the fray in June, when its real estate arm won the bid to redevelop the 101-acre Juhu Lane-Gilbert Hill slum cluster.

Sajjan Jindal’s JSW Realty was also among those interested. Mahindra & Mahindra, which has not prioritised slum redevelopment, is now looking at the segment.

Gautam Adani is already pursuing Mumbai’s SRA opportunity through the Dharavi redevelopment project.

The lure, according to industry analysts, is a more conducive SRA policy; new rules have made it easier to access large parcels of land, while the economics of redevelopment can be significantly more attractive than conventional Mumbai real estate.

The Change Of Rules

The biggest shift came with the new Slum Cluster Redevelopment scheme that was introduced last year.

It allows large tracts of land to be developed together and waives individual slum-dweller consent in eligible large clusters. It also allows mixed-use development across larger tracts of land.

Resident consent and fragmented plots have historically been among the biggest sources of uncertainty in slum redevelopment.

Under the new framework, the developer does not have to negotiate separately with every resident before proceeding with an eligible large cluster.

The larger development parcels also allow rehabilitation and saleable development to be planned together rather than as a collection of smaller projects.

“This redevelopment proposal under the new rule is less risky, it allows for hassle-free handover of the plot, it is no longer the builder’s prerogative to procure tenant consent and the ratio of the land size to FSI is also attractive,” said Pankaj Kapoor, founder and managing director of real estate research firm Liases Foras.

Instead of taking on a fragmented redevelopment opportunity whose economics can be derailed by individual negotiations, developers can now bid for a larger, more clearly defined parcel.

What’s In It For The Billionaires?

In June, Reliance 4IR Realty Development Limited, the real estate subsidiary of Reliance Industries, won the bid to redevelop a 101-acre Juhu Lane-Gilbert Hill slum cluster in Mumbai, under the new scheme introduced by the Slum Rehabilitation Authority (SRA). This marked the oil-to-telecom conglomerate’s entry into SRA projects.

Reliance has owned land parcels in Navi Mumbai since at least 2005, but its June victory marks its entry into this particular redevelopment market.

For JSW and Adani, real estate has been an established business, although SRA redevelopment is a more recent extension.

Gautam Adani has already made a go for Mumbai’s SRA pie with the Dharavi Redevelopment project, initiated in 2023. Besides Dharavi under SRA, Adani Group is implementing a MHADA redevelopment project in Motilal Nagar and two large MHADA redevelopment projects in Mumbai: Bandra Reclamation and Adarsh Nagar in Worli.

Mahindra could become the next large corporate entrant.

“Slum redevelopment is something we have not prioritised as of now. But given the way the market is shaping, we'll start looking at some of those deals,” M&M executives said on a recent analyst call.

“There are two major opportunities — the first is in rehabilitating and providing housing to eligible and impacted residents. The second is the access it provides to precious land which, under any other circumstances, would never hit the market at all,” said Anuj Puri, chairman of ANAROCK Group.

Dharavi shows the scale of the opportunity with 535 acres right in the middle of Mumbai, a city where large contiguous parcels of land are scarce.

According to Kapoor’s estimated calculations, SRA projects can offer EBITDA margins of 55% to 60%, compared with margins that have been as low as 18% for conventional Mumbai real estate projects in the past during weak markets.

The projects also have a much longer revenue horizon.

SRA developments can run for 15 to 20 years, giving developers visibility over a substantial pipeline of construction and sales.

That is a different proposition from the conventional Mumbai redevelopment market, where projects tend to involve smaller investments and can be completed within three to five years.

For a developer with limited capital, a 15-year project can be a burden. For a conglomerate with a large balance sheet, it can be an asset.

Big Parcels, Bigger Competition

The 101-acre Gilbert Hill project is an example of why the companies will need to bring in both scale and patience.

The total project cost has not been disclosed. The Reliance-led consortium is, however, reported to have committed about Rs 700 crore towards transit rent for two years, while the rehabilitation component is expected to take 10 years.

As these otherwise inaccessible, huge land parcels come up for bids under the SRA scheme, with interest from large conglomerates, it is making the fight tougher for existing realty names.

“Existing developers will find themselves competing aggressively for major headline-grabbing opportunities, often with players who can sit out the long gestation periods involved,” Puri said.

This obviously changes the competitive dynamics of Mumbai’s redevelopment market.

Traditional developers will now have to compete when the bidders have the ability to carry projects for a decade or more before the full economics play out.

The Market Is Getting Bigger Too

With the goals for 2030, there would be further opportunities for these conglomerates.

Behrampada in Bandra East, Majaswadi in Andheri and Behram Baug in Oshiwara are among the locations identified for the first phase, according to news reports.

JLL, in a report released this month, said SRA projects have reached an unprecedented execution momentum. It counted 1,202 active projects covering 2,156 acres and 321,858 tenements — nearly four times the number of tenements completed since the SRA was established in 1995.

The developments extend beyond the clusters already attracting corporate attention, including projects in the Parel-Sewri corridor, Dharavi, Wadala and Kurla.

But this also brings up the problem of financing.

If the country’s largest companies compete for these land parcels, these bids could become significantly harder to win.

Deep Pockets Won’t Be Enough

The new rules may have removed one major source of uncertainty, but they have not made SRA redevelopment a straightforward business.

Executives at M&M expressed caution on the investor call.

“The risk and rewards financially as well as brand are very different from what we have done in the past,” they said, adding they will consider the space once the whole policy gets stabilised.

Puri said the challenge goes beyond the balance sheet.

“Technically, anyone can try their hand, but practically, this is not a very friendly market for new players. They need to have deep local connections, understand exactly how this system works, be able to garner the trust of the affected residents, and have superlative execution capacity,” he said. “All these often count for more than just the balance sheet.”

This helps explain why conglomerates such as Reliance and JSW have chosen consortium structures for large projects.

The corporate balance sheet can provide capital and staying power, while established real estate partners bring local relationships and execution experience.

There is also a broader consequence for Mumbai’s property market.

Kapoor said that large-scale redevelopment by conglomerates could bring a significant amount of new housing into the market, potentially keeping prices and speculation in check and helping homebuyers.

The next phase of Mumbai’s SRA tests the biggest conglomerates through a business where local relationships, approvals and execution still matter. It will also test if traditional Mumbai developers can compete once the city’s largest pieces of otherwise inaccessible land become open to corporate bidding.